Wednesday, December 6, 2017

Money Life Lately

In a few weeks, I'll finally be eligible to contribute to a 401k plan again. It's difficult to understate just how excited I am! While clerking, one doesn't have access to any employer sponsored retirement plan, so it's been awhile since I've been able to save in earnest. It'll be too late to do much with it for 2017, but in 2018, I'm planning to max out my 401k and backdoor Roth IRA.

Here are a few other personal finance-related thoughts I've had recently, both of which relate to compensation for biglaw associates. Biglaw firms pay associate attorneys extremely well, though that ultra-transparent, ultra-standardized salary scale doesn't, in my view, tell the full story. Some of the compensation-related norms in the industry are unusual, and generally to the detriment of attorneys compared to other white-collar employees. (Also keep in mind that our massive student loans. My slightly shocking number was after a substantial scholarship, nearly half tuition, the best available as a strong, though not top, candidate for the schools I was targeting.)

401k (Non)Matching and Fund Selection

I don't know how common this is, but biglaw firms, as a general rule, don't match 401k contributions by associate attorneys in any way. There are a tiny handful of exceptions I know of, at least one of which doesn't have much of a NYC presence.

I'm only familiar with my previous firm's 401k plan's available mutual funds, and I'm not a terribly knowledgeable investor (for now, I'm comfortable that "stick it all in the appropriate Vanguard target date fund" is the right solution for me). It always seemed like my firm offered a random and less than ideal set of funds for our 401k, which was offered through a large, reputable company, something like Fidelity or Schwab. There was a S&P 500 index fund with okay, but more expensive than Vanguard, fees. They had Vanguard international stock market index funds too, which is good. That's most of the pieces I'd need to have my account resemble the Vanguard target date fund my Roth IRA was in. After that, everything else had really high fees.

Happy news, my old firm, at which I still have a small 401k nest egg, will soon offer Vanguard target date funds! Depending on my options at my new workplace, I may roll the account over, so I won't necessarily benefit. Because, however, my new workplace is a much smaller operation, I don't know if I can expect good mutual fund choices. I probably won't roll it over if I'm not as happy with the mutual funds on offer at the new place.

On Health Insurance

Some biglaw firms have started seriously nickle and diming their associates on health insurance. My old firm originally offered a PPO plan at around $160/paycheck (once every two weeks) and a significantly cheaper HDHP in the general range of $60/paycheck. I had the PPO, which seemed good, but had a problematic quirk where none of my women colleagues' birth control, nor mine, was fully covered, giving basically every woman an extra $10/month expense. I'd never had a co-pay for birth control on any other plan since "Obamacare" passed.

I'd assumed some amount of choice in health plans was the norm, though back then there was already news about certain firms electing to offer only a HDHP. Now, there's at least one law firm charging $170/paycheck for a HDHP, their only option. That seems insane, given what I had before, but well, I'm not in biglaw now, so I don't know if this is normal for the rest of the industry.

Are those health insurance costs out of the ordinary? Are you satisfied with your 401k plan's available mutual funds? Of course, for young, healthy adults, there may still be reasons to pick a HDHP, in part because a HSA can be used as yet another tax-advantaged retirement account, but any attorney who used to have better health insurance and paid less for it will, naturally, be upset.

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About Me

I'm Xin, a late-20s attorney based in New York City. I write about anything that strikes my fancy, with a particular focus on fashion, shopping, personal finance, and trying to live a more minimalist, intentional life.

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